SATISH NAGESH KULKARNI,SECUNDERABAD vs. DCIT., CIRCLE-10(1), HYDERABAD

On being queried, it was claimed by the assessee that he was the Regional Head for M/s. CIS Bureau Facility Services Ltd. and was responsible for the distribution of salaries and payment of recurring

Aggrieved, the assessee carried the matter in appeal before the CIT(A). For the sake of clarity, the observations of the CIT(A) are culled out, as under: “Findings and Decision 4. The facts of the case as per record are that the Assessee-Individual filed return of income for the A.Y. 2016-17 on 03.01.2017 declaring total income of Rs.21,51,940/-. The case was selected for limited scrutiny under CASS to examine ‘whether the cash deposits made during the year are from disclosed sources’. The Ld. AO issued notice u/s 143(2) dated 08.09.2017 and was duly served on the assessee. Thereafter, the Ld. AO issued notice u/s 142(1) calling for details of the cash deposits made in the bank accounts maintained by the assessee in various banks. As per the information furnished by the assessee he held the following bank accounts: 1. Dena Bank account no. 015910024970 2. Federal Bank account no. 1577 3. HDFC Bank account no. 50100042444346 4. ICICI Bank account no. 111801000158 5. J&K Bank account no. 81100100000072 Satish Nagesh Kulkarni vs. DCIT 6. Oriental Bank of Commerce account no. 10582041060184 7. State Bank of India account no. 31111439099 8. State Bank of India account no. 10198770988 4.1 During the year under consideration the assessee had deposited cash amounting to Rs.1,58,05,602/- in the above mentioned bank accounts. The assessee in his submission has stated that he was the Regional Head for M/s. CIS Bureau Facility Service Ltd. (herein after referred to as the Company) and was responsible for distribution of salaries and payments of recurring expenses of his zone and that during the 1st week of every month the company dispatched signed post date self cheques to draw and distribute the security guard payments and to incur current expenses of the zone. Therefore, he has drawn the cash from the current account of Head Office to avoid transaction risk and the amount drawn was deposited in his savings bank a/c. no.31111439099 held with SBI and that the funds were transferred via net banking to his local managers for payment of respective salaries at their location. Further, he also submitted that during the relevant FY, there were cash withdrawals to the tune of Rs.29,10,000/-, out of which an amount of Rs.20,61,800/- was redeposited into his bank accounts. 4.2 The Ld. AO issued a notice u/s 133(6) to M/s. CIS Bureau Facility Service Ltd. for confirmation but there was no response. Further, the assessee had not submitted details like the current account number and bank of the head office etc. The Ld. AO conducted a detailed analysis and found the assessee’s explanation was not correct and hence unacceptable. Therefore, the Assessing Officer calculated the peak debit into the bank accounts at Rs.1,33,03,402/- and added the same to the income of the assessee u/s 68. The Ld. AO passed an order u/s 143(3) dated 29.12.2018 and assessed the income of the appellant at Rs.1,54,55,342/-. Aggrieved by the said order the appellant instituted the current appeal.

I have carefully examined the facts of the case, the assessment order of the Ld. AO passed u/s 143(3) and the grounds of appeal

As the assessee despite having been put to notice about the hearing of the appeal has neither put up an appearance nor moved any application for adjournment, therefore, we are constrained to proceed with and dispose of the appeal as per Rule 24 of the Income Tax (Appellate Tribunal) Rules, 1963 after hearing the respondent revenue and perusing the orders of the authorities below.

Shri K. Vinoth Kannan, Learned Senior Departmental Representative (for short, “Ld. Sr-DR”) at the threshold of hearing of the appeal submitted that the present appeal involves a delay of 438 days and thus, the same is liable to be dismissed on the said count itself. Apropos, the merits of the case, the Ld. Sr. DR relied upon the orders of the authorities below.

We have given thoughtful consideration to the facts pertaining to the delay in filing the present appeal before us. On a perusal of the record, we find that the assessee had filed an application, dated 12/06/2025, seeking condonation of the delay of 453 days (actual delay is 438 days). Elaborating on the reasons leading to the delay, the assessee had stated that the said delay had crept in because, being a cancer patient, he was, during the relevant period, undergoing treatment at Pune and thus, for the said reason could not access the order passed

We have thoughtfully considered the facts leading to the delay in filing of the present appeal as have been stated by the assessee in his application seeking condonation of the delay therein involved, read along with the “affidavit”, dated 12/06/2025.

In our view, there are justifiable reasons which had resulted to the delay in filing of the present appeal, viz., (i) that the assessee during the relevant period was undergoing treatment for cancer at Pune and thus, could not access the CIT(A) order; and (ii) that Shri VVD Prasad, Chartered Accountant, who was engaged by the assessee to look after his case had unfortunately expired and the matter had gone unattended before the CIT(A). We, thus, are of firm conviction that though the delay of 438 days involved in filing the present appeal before us is undeniably inordinate, but as there are justifiable reasons explaining the same, therefore, the same, in all fairness and in the interest of justice, merits to be condoned. Our aforesaid view that a liberal approach should be taken

Coming to the merits of the case, we find that as the assessee had failed to come forth with any plausible explanation regarding the source of the cash deposits made in his multiple bank accounts during the subject year, therefore, the AO after rejecting the unsubstantiated explanation of the assessee had in all fairness restricted the addition only to the extent of peak debit balance of Rs.1,33,03,402/-.

Be that as it may, we find that though the assessee had filed before the AO a confirmation letter of the company, viz., M/s. CIS Bureau Facility Service Ltd., but the same was not supported by any documentary evidence, i.e., current account of the Head Office, rolls of the security personnel etc. For the sake of clarity, we deem it fit to cull out the observations of the AO, which thereafter had been upheld by the CIT(A), as under:

The submissions of the assessee have been perused. It is the contention of the assessee that the amounts were withdrawn from the current account of the Head Office through self cheques and the amount was deposited into his SB Account. The reason for this modus operandi, as explained by the assessee, is to avoid the transaction charges. The contention of the assessee cannot be accepted for the reason that after depositing the amount into his SB Account, the assessee is in turn transferring the funds through internet banking. The Satish Nagesh Kulkarni vs. DCIT transaction charges for online funds transfer are same for both the SB Account and the Current Accounts. 4.2. The assessee further submitted the month-wise details of self cheques sent by the company to its zonal manager and the month- wise payments made. On verification of the details, it is seen that there is no uniformity in the quantum of the funds transferred by the company and also in the quantum of the payments made. In case the contention of the assessee that the cash was deposited to meet the recurring expenditure is to correct, the number of payment transactions should be more or less uniform; whereas it is seen from the details submitted by the assessee that there is no such uniformity in the number of transactions. For eg. during the month of March 2015, there are payments to as many as 124 persons; during for the month of October 2015, there are payments to as less as 15 persons. Therefore, the contention of the assessee that cash was deposited to meet the recurring expenditure of the office is incorrect. 4.3. Further, letter u/s.133(6) was issued to the Company, but there is no response from the Company. Though confirmation letter of the company was filed by the assessee, the same was without any supporting documents like the current account of the Head Office, rolls of the security persons etc. 4.4. In view of the above, the contention of the assessee is not acceptable. As the assessee has also claimed that the cash withdrawals made by him were re-deposited into his bank account, the peak credit/debit balance is worked out as under: xxx xx xxx 4.6. It is seen from the above that peak debit balance is Rs.1,33,03,402/- as on 31.03.2016. As the assessee has failed to satisfactorily explain the sources of cash deposits, the peak debit of Rs.1,33,03,402/- is added to the Total Income of the assessee as unexplained cash credits u/s.68 of the Act.”

We have given thoughtful consideration, and though, principally concur with the AO that the assessee had failed to substantiate his explanation that the source of the cash deposits in his bank account No. 31111439099 held with SBI was sourced out of the cash withdrawals made from the current account of M/s. CIS Bureau Facility Service Ltd for meeting out the salaries and payments of recurring expenses by him

Resultantly, the appeal filed by the assessee is allowed for statistical purposes in terms of our aforesaid observations.